Epstein-Barr virus (EBV) nuclear protein 2 (EBNA-2) is essential for B cell transformation by the virus. The goal of this project is to determine the mechanism of B cell transformation by EBV. Injection of EBV-transformed human lymphocytes into SCID mice results in the appearance of fatal human B cell tumors containing EBV. Cell lines were developed that contained EBV mutants that were identical, except for different deletions in their EBV EBNA-2 gene. EBV mutants with deletions in the amino half of EBNA-2 had their EBV EBNA-2 gene. EBV mutants with deletions in the amino half of EBNA-2 had reduced transforming activity in vitro and produced tumors in mice more slowly, while a carboxy- terminal mutant had a transforming activity greater than or equal to wild-type and produced tumors more rapidly than wild-type. Therefore, EBNA-2 is important both for lymphocyte transformation in cell culture and B cell tumor growth in SCID mice. EBV EBNA-2 contains a domain that directly activates transcription; a 14 amino acid region possesses much of the transcriptional activity and is essential for transformation by EBV. A chimeric virus was constructed that contained a portion of the transcriptional activation domain from the herpes simplex virus VP16 inserted in place of the 14 amino acid region in EBNA-2. This chimeric virus was able to transform B lymphocytes and transactivate expression of EBV and B cell genes. Mutation of a single amino acid in the 14 amino acid domain of EBNA-2 abolished transcriptional activation and B cell transformation. Thus, transcriptional activation is required for EBV-induced B cell transformation.